Be Smart with your Money!
money left after taxes?
Disposable income
Is the money you earn by working—either for yourself, someone else or a business you own. It’s also called “active income”
Earned Income
wages withheld from an employee’s total earnings for the purpose of paying taxes, garnishments and benefits
Payroll deductions
what is a mortgage?
loan you get from a lender(bank) to finance a home purchase.
What is risk?
chance of loss from an event that cannot be entirely controlled.
two types of costs?
Explain both give examples?
Fixed cost: recurring expense that does not change in amount (Rent, Mortgage, Car payment, Insurance premiums, Phone/Internet bill)
Variable cost: a recurring expense that can change in amount based on various factors including usage (Gas, Food, utilities: water/electricity, Clothes, Travel)
People who want to be independent, self-employed, these are often temporary or short-term jobs performing a single task on demand.
Side Hustle/Side Gigs
are taken from an employee’s paycheck before any taxes are withheld.
Pre-Tax deductions
1. This is the portion of your loan balance that’s paid down with each payment.
2. charged monthly by your lender for the mortgage you chose.
1. Principal
2.Interest
Risk is managed by (2 things)
Emergency savings
Insurance
Disposable income is influenced by what 3 factors?
Education: plays a decisive role in economic performance. Typically those in society with more education earn higher salaries.
Career: job you choose plays an important part in the amount of money you make and have.
Investment: Investing your money into mutual/index funds, bonds, stocks, retirement plans(401k/Roth), CD's, savings, real estate
make money without being fully involved or actively working for it.
Passive Income
mandated by government agencies to pay for public programs and services. They consist of federal income tax, State income tax, etc.
Statutory deductions
most common fixed rate mortgages?
15 year mortgage/30 year mortgage
1. Insurance policy?
2. Premium?
1. contract that specifies what risks are covered and how much will be paid for losses.
2. Money paid to purchase the policy (paid monthly)
3 main reasons to budget?
Avoid Debt/bankruptcy
Savings
Retirement
collection of your monetary assets, and investment income
Portfolio Income
taken from an employee’s paycheck after all required taxes have been withheld.
Post-tax deductions
Every month you pay your mortgage it gets split into four categories, What are they?
PITI
Principal
Interest
Taxes
Insurance
1. Deductible?
2. Co-Insurance?
1. Fixed amount paid out of pocket depending on policy.
2. amount of money after deductible, that is paid jointly by the insured & the insurance company.
3 types of budgets/spending plans?
Explain all 3
zero-based budget: every dollar of income is allocated to specific expenses or savings goals. This means that income minus expenses should equal zero.
50-30-20 budget: 50% to needs, 30% to wants, 20% to savings/retirement
Pay-Yourself First: saving a portion of your income before paying any other expenses.
1. Payments for the use of an asset?
2. The difference when you sell something for more than you paid for it?
1. Royalties
2. Capital Gains
FICA Taxes support?
Social Security & Medicare
When qualifying for a Mortgage Lenders consider what?
Credit score, Debt-to-income-ratio, Down Payment, Rainy day reserves, Property type, occupancy plans.
5 steps to the insurance process?
1. Claim: event that occurs with some type of loss.
2. Report claim to insurance.
3, insurance then checks to see if the claim is covered by current policy you have.
4. If it is covered by insurance policy, then you pay a deductible.
5. Remaining amount owed is paid by co-insurance